Hedge Funds Are Selling Zix Corporation (ZIXI)

Is Zix Corporation (NASDAQ:ZIXI) worth your attention right now? Money managers are getting less bullish. The number of long hedge fund positions shrunk by 2 lately.

To most shareholders, hedge funds are seen as slow, outdated investment tools of yesteryear. While there are more than 8000 funds with their doors open at the moment, we look at the elite of this group, close to 450 funds. Most estimates calculate that this group oversees most of the hedge fund industry’s total asset base, and by tracking their best equity investments, we have come up with a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Equally as key, bullish insider trading sentiment is another way to parse down the stock market universe. There are a number of stimuli for an insider to get rid of shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many empirical studies have demonstrated the market-beating potential of this strategy if piggybackers know what to do (learn more here).

Now, let’s take a peek at the latest action regarding Zix Corporation (NASDAQ:ZIXI).

Hedge fund activity in Zix Corporation (NASDAQ:ZIXI)

Heading into Q2, a total of 6 of the hedge funds we track were bullish in this stock, a change of -25% from the first quarter. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes significantly.

Of the funds we track, Israel Englander’s Millennium Management had the biggest position in Zix Corporation (NASDAQ:ZIXI), worth close to $0.8 million, comprising less than 0.1%% of its total 13F portfolio. The second largest stake is held by Jim Simons of Renaissance Technologies, with a $0.5 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedgies that are bullish include D. E. Shaw’s D E Shaw, John Overdeck and David Siegel’s Two Sigma Advisors and Cliff Asness’s AQR Capital Management.

Because Zix Corporation (NASDAQ:ZIXI) has faced a declination in interest from hedge fund managers, logic holds that there was a specific group of fund managers that slashed their full holdings in Q1. At the top of the heap, Louis Bacon’s Moore Global Investments dumped the largest investment of the 450+ funds we monitor, valued at close to $0.4 million in stock.. Matthew Hulsizer’s fund, PEAK6 Capital Management, also cut its stock, about $0.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 2 funds in Q1.

How are insiders trading Zix Corporation (NASDAQ:ZIXI)?

Insider trading activity, especially when it’s bullish, is most useful when the primary stock in question has seen transactions within the past 180 days. Over the latest six-month time period, Zix Corporation (NASDAQ:ZIXI) has seen 5 unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Zix Corporation (NASDAQ:ZIXI). These stocks are Unwired Planet Inc (NASDAQ:UPIP), Market Leader Inc (NASDAQ:LEDR), QAD Inc. (NASDAQ:QADA), American Software, Inc. (NASDAQ:AMSWA), and Agilysys, Inc. (NASDAQ:AGYS). This group of stocks belong to the application software industry and their market caps match ZIXI’s market cap.

With the results shown by the aforementioned time-tested strategies, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and Zix Corporation (NASDAQ:ZIXI) shareholders fit into this picture quite nicely.

Click here to learn why you should track hedge funds